‘Highly uncertain’ that IHT changes will raise £500m – OBR report
23rd January 2025
A new forecast from the Office of Budget Responsibility (OBR) casts doubt on how much money will be raised by IHT changes.
A new supplementary forecast from the Office of Budget Responsibility (OBR) says there is a high degree of uncertainty over how much IHT changes will raise.
It also confirms that elderly farmers will be left with little time to plan for the new policy.
The Treasury claimed this would raise £500m by 2029-30 to help fill the £22bn black hole in public spending, and was needed to improve public services.
High uncertainty
However, despite the Treasury claiming that the OBR had certified its claims, the new forecast suggests high uncertainty over how much will be raised.
This is down to the wide range of tax planning options available, including spouse exemption, asset disposals and greater use of other reliefs and allowances.
The forecast says: ‘This policy costing was assigned a “high” uncertainty rating.
‘The main driver of uncertainty is the behavioural response to the measure, given the range of options potentially available.’
Additionally, it acknowledges: ‘In the medium term, it is likely to be more difficult for some older individuals to quickly restructure their affairs in response to the measure.’
READ MORE: Food insecurity on the rise, Defra report finds
READ MORE: Farmers deliver their produce to Chancellor Rachel Reeves
Terrible human impact
NFU president Tom Bradshaw said it was an “appalling position” to put elderly people in.
He added: “One minute they were advised to keep their farms until death to pass them on to the next generation, the next they’re left knowing that if they live beyond April 2026 when the measures come in, their children may have to break up or sell the farm.”
Mr Bradshaw said he had outlined the human impact of the policy when he met the prime minister, in a letter to the chancellor, and in front of the Efra Select Committee.
“At every stage the government has consistently ignored what we have been telling them about this abhorrent policy. Is it now going to ignore the OBR too?
“And, given the OBR says it’s highly uncertain it will raise the expected amount of money either, surely it is time for ministers to accept this policy needs the proper consultation it never had?”
Investment being pulled
Meanwhile, Victoria Vyvyan, president of the Country Land and Business Association, said in a statement:
“Ministers have repeatedly said that the OBR had certified their claims, but the truth is that the OBR themselves say there is a high degree of uncertainty as to how much money will be raised, if any at all.
“But we do know that farmers and small business owners are pulling investment, cancelling machinery orders and considering whether their businesses are viable for the long-term.
“This means fewer jobs, less food security, less growth and less money going into the Exchequer to pay for public services.
“Government must put these reforms out to a meaningful consultation, so that Treasury can truly understand the damage they are doing.”
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